BHP set to push ahead with bid for Rio Tinto despite Chinese intervention (another Chicom invasion?)

Times Online ^ | 2008 Feb 4 | Siobhan Kennedy

[Wiz]

BHP Billiton is understood to be planning to push ahead with its $119 billion (£61 billion) offer to buy Rio Tinto, despite a last-minute attempt by China’s Government to break up the deal.

China’s purchase of a 9 per cent stake in Rio Tinto on Friday stunned the markets and BHP and cast doubt on whether the mining group would be able to launch a full offer by a Takeover Panel deadline on Wednesday.

Sources said that it would be hard for BHP to proceed, given that Bejing effectively now has a blocking stake in Rio Tinto and is determined to emerge as a powerful force from this round of industry consolidation.

However, other sources last night said that Marius Kloppers, BHP’s chief executive, was not deterred by China’s move. One described it as “just another factor which muddies the water” and said that Mr Kloppers was minded to press ahead with BHP’s bid regardless.

BHP’s determination to proceed came as it emerged that Vale, the world’s second-largest mining group, which is considering a bid for Xstrata, the Anglo-Swiss mining group, dropped Merrill Lynch as one of its lead advisers after the investment bank decided against helping to finance the bid.

It was not immediately clear whether BHP plans to raise its current offer of three BHP shares for every Rio share, which Rio has rejected as undervaluing the company.

BHP has argued steadfastly that this is not a case of measuring premiums over share values, since Rio’s investors are being offered 41 per cent of the enlarged group. Mr Kloppers is understood to be reluctant to raise his bid, given that there is currently no other offer on the table. A raised offer would, in essence, mean that BHP was bidding against itself.

[Wiz]

I hope the nightmare of Unacol will never be repeated again.